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Residents affected by typhoon Haiyan (Yolanda) carry on with their daily activities on July 13, 2014, eight months after the super typhoon destroyed lives, livelihoods and property and swept ships on the shores of Tacloban city.Photo credit: Dominic Chavez/World Bank

The remittance gap: key findings of a study in Tacloban City after Typhoon Haiyan

by Yvonne SuDecember 2017

There is growing recognition that migrant remittances play a critical role in post-disaster recovery and humanitarian relief. In urban crises, remittances can reach affected households in a matter of days, while humanitarian response can take weeks if not months to arrive. As a result of the promise that remittances hold, the World Humanitarian Summit has embraced the diaspora as emerging and promising stakeholders, thrusting migrant networks and their remittances into the frontlines of humanitarian response. But before we get too carried away, we should take a step back and ask who the winners and losers are in the remittance game. Should people receiving money from their family and friends abroad be eligible for humanitarian support?

I spent six months in Tacloban City in the Philippines after Typhoon Haiyan collecting 507 surveys and speaking with affected communities to examine who benefits, and who is excluded from, remittances in post-disaster recovery. This research revealed the ways in which class-based inequalities structure people’s access to and exclusion from remittances, and how remittance flows are mobilised during post-disaster recovery. Disaster-induced surges of remittances can have positive effects on recovery, but the funds are also unevenly distributed, suggesting differential impacts and outcomes in post-disaster settings. The key policy message is that humanitarian actors need to be cautious about selecting or prioritising beneficiaries based on whether or not they have access to remittances. Accurate and up-to-date assessments of vulnerability and need are required.

The surge after the storm

When Typhoon Haiyan (local name Yolanda) struck the Philippines on 8 November 2013, it was the strongest storm ever recorded. The typhoon left 6,300 people dead and caused almost $1 billion of damage. Haiyan grabbed global attention not only because of the scale of the devastation, but also the global outpouring of support for the victims, especially from the Filipino diaspora. According to the IASC Inter-Agency Humanitarian Evaluation of the Typhoon Haiyan Response, ‘the diaspora played possibly the most direct and important role for many affected communities. In a year-to-year comparison, remittances to the Philippines rose by $600 million in the first three months following Haiyan’. Many macroeconomic studies find similar increases in remittances following major hazards. The question is where does this money go?

Remittances can widen access to food, building materials and other necessities in the immediate aftermath of a disaster. Households that receive remittances are better prepared for and recover faster from disasters than households that don’t. Macroeconomic studies demonstrate the positive role that remittances can play in the face of disasters. However, a deeper review of case studies shows that the relationship between remittances and disasters is highly dependent on a range of factors, including the scale of remittances before the disaster, the financial situation of remittance senders and whether the disaster has disrupted access to remittances.

In the Philippines, the large financial and psychological costs of migration and the educational requirements involved mean that people with low incomes are largely prevented from migrating.+Jonathan Corpus Ong’s classification of Upper, Middle and Lower Class in his book The Poverty of Television (Anthem Press, 2015) was used to classify households into lower-income and middle-income in this study. Ong brings together various indicators to provide definitions of class in the Philippines based on monthly income, education level and profession of the head of the household, as well as the type of housing the household occupies. As a result, remittances are primarily received by people with higher incomes whose family members or relatives have migrated. As such, there are clear class-based inequalities in the access to and mobilisation of remittances. Most studies on remittances and post-disaster recovery utilise large multi-country datasets. Such macroeconomic studies fail to identify details such as the income of remittance-receiving households, or whether households are receiving regular or irregular remittances. These gaps in the literature have implications on the ground when NGO questionnaires for selecting beneficiaries ask generalised yes/no questions about whether a household receives remittances. Without an understanding of the class-based inequalities that shape remittance access or the diversity of remittance patterns, humanitarian organisations risk overlooking people who need their help.

Class-based inequalities in access and mobilisation of remittances

Middle-income households have more access to remittances

The study in Tacloban City confirms the ‘remittance gap’ between middle- and lower-income households. Of the 507 households surveyed, 106 were classified as middle income, and 401 as lower income. Within middle-income households, 57% reported that they had access to remittances from someone in their family living or working overseas. For lower-income households the figure was just 24%. The remaining 76% of lower-income households reported having no access to remittances at all. Table 1 shows a breakdown of the number of households in each category.

Table 1. Number of households in each category

Middle-income (n = 106)

Lower-income (n = 401)

Access to remittances

60 (57%)

96 (24%)

No access to remittances

46 (43%)

305 (76%)

Having a relative or family member abroad is only half the story. The key question is whether households can translate that access into financial support in times of need. In other words, can households actually get their migrant relatives to send them money? A principal finding of my study is that many households that have access to remittances could not actually get their relatives to send them money after Typhoon Haiyan. This limitation was more severe for lower-income than middle-income households. While the majority (74%) of middle-income households that had access to remittances in theory could translate them into financial assistance, just 48% of lower-income households were able to do the same. Table 2 provides a breakdown of financial assistance for post-Haiyan recovery among those with access to remittances.

Table 2. Number of households that received remittances after Haiyan

Middle-income with access to remittances (n = 60)

Lower-income with access to remittances (n= 96)

Got financial assistance

44 (74%)

46 (48%)

Did not get financial assistance

16 (26%)

50 (52%)

While it may appear obvious to reach out to relatives abroad in times of need, the complicated nature of human relationships, especially within kinship networks, can make this difficult or unthinkable for some households. For example, one respondent reported that all three of his siblings were working overseas, but none offered any assistance because they had families of their own that were affected. Other respondents were simply too shy or ashamed to ask for assistance, especially from relatives they were not very close to. As one respondent put it: ‘Makaarowod pangaro hit mga urupod labi na waray gud communication namon’ [‘It’s shameful to ask for assistance from relatives abroad especially since we don’t have much communication’]. In addition, according to cultural expectations in the Philippines, assistance is supposed to be offered by relatives abroad as opposed to requested by affected families. Therefore, if the migrant did not help, the households would be imposing if they asked. As well as the shame associated with asking for help, there was a fear of rejection. On the few occasions that respondents disclosed that they had solicited assistance from relatives overseas and had been rejected, they appeared to be very distressed.

Even for households that succeeded in mobilising remittances after Haiyan, most of the time that support only came once. As one respondent said: ‘Kausa la ka beses nahatag/nabulig kay mayda hira mga pamilya na’ [‘They only sent once because they have families of their own’]. Overwhelmingly, respondents described assistance from family abroad as ‘one-shot’ occurrences to help meet immediate recovery needs, such as food and medicine. Thus, while remittances do commonly increase after major sudden-onset disasters, my findings support other studies that caution that this support is usually not sustained or increased in the long run.

Humanitarian implications

What do these findings mean for humanitarian work? There are two main takeaway messages. The first is: get local remittance data. While the Philippines is the third-largest global recipient of remittances, the typhoon struck the country’s second-poorest region, Region VIII. This region is known for its widespread poverty and extremely small labour out-migration: according to the Philippines Statistics Authority, just 1.6% of Overseas Filipino Workers (OFWs) came from Region VIII in 2013. Figure 1 gives a breakdown of the distribution of OFWs by region. Since Region VIII does not send out a significant number of migrants, it is not likely to receive a great deal in remittances. Getting local data should be a key first step in any humanitarian operation: it cannot simply be assumed that high levels of remittances nationally apply at the local level as well.

Figure 1. Distribution of OFWs by region (2013)

Source: Philippines Statistics Authority, 2012 and 2013.

The second key message is that using receipt of remittances as an exclusionary criterion might be unhelpful – or, worse, harmful – for beneficiary selection. While humanitarian organisations know well the role remittances can play in post-disaster recovery, in the Haiyan response they became a formal part of the process. The Shelter Cluster Philippines’ ‘Shelter Prioritization Socio-Economic Assessment Tool’ was a questionnaire created as part of the Haiyan response as a template for beneficiary prioritisation for all NGOs engaged in the cluster. The purpose of the questionnaire was to help NGOs prioritise affected families for shelter programmes. Depending on the respondents’ answers, they were allocated points out of a possible total of 100. One of the criteria was ‘not in receipt of overseas remittances/financial support for [sic] from relatives nationally or internationally’. Evaluators were instructed to assign a score of five if the answer to that question was ‘yes’ (see Figure 2).

At face value the question appears to be straightforward, but is in fact quite ambiguous. To begin with, what does ‘remittances’ mean? Does it include non-financial remittances such as gifts or material goods? Why are national and international remittances grouped together when national remittances are often less than international remittances? Moreover, the question does not ask the value of the remittances a household receives or how regularly it receives them. Instead, the question assumes that households that do not receive remittances are more vulnerable than those that do. This overlooks the reality that remittances are unevenly experienced and their impacts dependent on the circumstances of the senders and receivers. Without further clarification, NGOs could be deciding whether households should receive assistance based on assumptions about remittance-receiving patterns, which can be quite irregular.

It is dangerous for humanitarian organisations to assume that households with access to remittances have more capacity to cope with and recover from disasters if this wrongly excludes vulnerable households from assistance. Ambiguous questions on beneficiary prioritisation or selection forms can be harmful to the humanitarian process and undermine trust between affected communities and humanitarian actors. Without extensive testing, it is not clear whether respondents understand the meaning and implications of this question. If the respondent indicates that they receive remittances, they may lose five points – even if the remittances they receive are irregular and unreliable. But if they say that they do not receive remittances, they may be caught in a lie as their neighbours and the village captain will be aware that they have relatives abroad. As a result, such ambiguous criteria for beneficiary prioritisation can encourage households to lie or withhold information about their connections abroad for fear of being excluded from NGO assistance. More research is needed so that NGOs do not base their selection of beneficiaries on misrepresentations and faulty assumptions about remittances and extra-local support.

Not only is there a remittance gap between people with lower incomes and those with middle and high incomes, there is also a gap in knowledge about who benefits and who is excluded from remittances. Academics and humanitarian actors need to fill this gap in remittance research, knowledge and practice so that we can temper remittance euphoria and ensure that our policies are accurate and evidence-based.

Yvonne Su is a PhD Candidate in Political Science and International Development at the University of Guelph in Ontario, Canada. This article draws on Y. Su and L. Mangada, ‘A Tide that Does Not Lift All Boats: The Surge of Remittances in Post-Disaster Recovery in Tacloban City, Philippines’, Critical Asian Studies, 50 (1), http://www.tandfonline.com/doi/full/10.1080/14672715.2017.1401935.

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